Public Utility Fees to Rise in 2nd Half

Higher public utility bills are expected in the second half of this year due to soaring oil prices.

The government froze all utility rates in the first half to keep inflation in check. Soaring energy prices, however, are putting growing pressure on public utility prices.

KEPCO, the state-owned power company, suffered 219.1 billion won (approximately 209 million U.S. dollars) in operational losses in the first quarter due to a sharp increase in electricity purchasing prices. The price of flaming coal, a major source of fuel for thermal power plants, has almost doubled this year. Inflation has also hit liquefied natural gas.

Knowledge Economy Vice Minister Lee Jae-hoon told a recent news conference that higher electrical fees are unavoidable this year.

If electricity prices rise, those of gas and heating are likely to follow.

Korea Gas Corp. adjusts its prices six times a year and Korea District Heating Corp. four times by reflecting fuel costs and facility investment. They have yet to make adjustments this year.

Public transportation fares for trains, express buses, subways and buses, which the government froze in the first half, are facing inflationary pressure due to skyrocketing fuel costs.

“It is getting impossible to control utility prices due to energy price hikes,” a government source said. “What we can do is to keep the raises to a minimum and slow the pace of inflation.”

changkim@donga.com